Net zero in social housing: strategic regional partnerships, better tenant engagement and good partners

Net zero investment, policy, training, and bravery.

Two of the hottest political potatoes in the UK are housing and achieving net zero. As part of its ongoing Client Strategy, CIOB investigated both at once recently at its latest roundtable of 16 senior representatives from the social housing sector.

Co-hosted by the Chartered Institute of Housing (CIH) and chaired by Mike Foy, CIOB Past President and Chair of the CIOB Client Steering Group, the event was conducted under the Chatham House rule to encourage honesty and open debate. Here we report on the findings.

Background context

Providers of social housing are a significant segment of the overall housing sector and thus an important target for decarbonisation.

With 4.4 million homes in England owned and operated by registered providers, the focus of any net zero action is necessarily on existing social housing stock, most of which is rented. It is unsurprising, therefore, that the roundtable discussion concentrated mainly on the challenges of upgrading homes currently occupied by tenants – rather than any newbuild work.

By definition, the sector’s existing stock comprises buildings of varying ages. This has left a patchwork legacy of homes in different tenures built with different techniques (e.g., solid wall/cavity wall) to different standards (e.g., different versions of Building Regulations) and a variety of infrastructure connections (e.g., looped grid services and communal heat networks). On top of that, the extent of any repair, maintenance and improvement (RMI) over time will have been varied and unevenly recorded, making it hard to assess any house’s current state of play.

Overall, therefore, the task of upgrading portfolios of homes is complex. Because of this, working out an efficient and effective way to retrofit social housing providers’ homes to the same standard – reaching a minimum EPC rating of C by 2030 for households in fuel poverty, for example - is tricky, especially when some of the technology has yet to mature and government policy (on gas boilers, for example) wavers.

The difficulty is compounded by conflicting priorities, not least to do with health and safety, innovation, climate change adaptation, and meeting Decent Homes standards. As one delegate put it, “Putting these pieces of the jigsaw together at the moment is like trying to pin jelly to the wall.”

Funding for viability

Knowing what needs to be done across a portfolio of properties when finances are constrained is a conundrum made worse by current high interest rates. Various government-backed schemes have over the years attempted to help registered providers, most notably the Social Housing Decarbonisation Fund (SHDF).

While helpful, providing cash does not always greenlight decarbonisation work, though. Take older, solid-wall construction, for example. Insulating them as part of a fabric-first solution is not only comparatively expensive but runs the risk of actively damaging the asset’s value. One housing association delegate reported that this makes retrofit hard to justify in the business case. As she put it, “We've got a question mark around how we invest in listed buildings and homes in conservation areas in a way that doesn't completely break our business plan.”

SHDF-funded projects should conform to PAS 2035 and yet, as the Retrofit Academy has pointed out, the RMI sector has neither the labour nor the skills to support this ambition, certainly not in the timescales required. What’s more, existing capacity in the market is pulled in by larger contractors, thwarting social housing clients attempts to contract directly with small local contractors. All of this drives up costs.

While delegates obviously appreciate the SHDF, they thought it could be improved. In particular, they criticised how resource-intensive it is and how its conditions do not allow enough time to procure contractors or liaise properly with tenants, leading to change requests and therefore delays.

At the strategic level, the way SHDF is structured does not promote the long-term partnerships needed to build retrofit skills, knowledge, experience and behaviours (SKEB) across a team, eroding suppliers’ confidence to invest in training. One delegate called for more creative funding models, perhaps with the injection of private capital as exemplified by the Energy Company Obligation (ECO).

Strategic geographic partnerships

Long-term partnerships were highlighted more generally as a potentially useful strategy for faster, more efficient decarbonisation of the social housing stock. The shortage of skills and finances mean that lots of piecemeal SHDF packages to fund lots of different contracts across a wide geographical area wastes limited resources. As one delegate up it, “Packaging things up in weird little bidding packages for SHDF does not fit with the long-term plan that you want in your business plan.”

Instead, the group imagined the possibility of providers working together – probably under the relevant local authority – to retrofit a whole area under fewer contracts. This would reduce administrative burdens, bring down costs for contractors and improve clients’ viability.

The resulting assured pipeline of work would justify contractors investing in retrofit training and encourage suppliers to reduce prices through economies of scale. It could also provide a platform to address the placemaking objectives that are so important to community cohesion and wellbeing. To do it, though, the sector needs better information sharing and, critically, “a more grown-up strategic partnership” between it and the government.

Engaging tenants

The delegates also identified proper engagement with tenants as an important key to unlocking faster and more widespread retrofit. Tenants are often in fuel poverty and vulnerable in other ways. Not only will they be anxious about disruption and fear energy price rises (as a consequence of going electric, for example), but they may have witnessed the delays and broken promises that can go with retrofit work. For example, one delegate described how they installed air source heat pumps without undertaking fabric upgrades first, resulting in many complaints from tenants because of the increased cost of electricity bills. No wonder they are wary of letting contractors through their doors.

There was general consensus that any such wariness is usually because the housing provider has not engaged early, fully and respectfully enough with tenants’ precarity or had delegated the task to a third party. Delegates conceded that, rather than presenting retrofit as disruptive technical work, they would do better to focus on its beneficial outcomes, not least reduced energy bills, better health outcomes, and improved quality of life. One delegate wished that this link to social wellbeing was made more explicit: “Instead of saying retrofit is about EPCs, why not say that we’re working to provide a better community?”

Tactics for success include the provider having their own dedicated tenant engagement team, fuller and more engaging communication, carrying out retrofit assessments at the same time as mandatory work (e.g., electrical safety inspections), and modernising homes at the same time as any retrofit work.

Organisational alignment and climate literacy

The roundtable group reported making headway along the path to net zero had forced them to connect parts of their organisation in ways that were new and required some restructuring and changes in roles and responsibilities.

For example, one delegate’s company reorganized to ensure that retrofit planning was considered within their investment planning. All activity now works together as an end-to-end process in a single system.

Another focused on setting mandatory sustainability objectives monitored at half-yearly intervals for their entire senior leadership team. This has helped them to prioritise more effectively and coherently, allowing their day-to-day decisions to have the best carbon-reducing potential. As the delegate said, “All our senior leaders can manage finance budgets, but can they manage a carbon budget? Can they make smart choices? Making them aware is a massive step forward.”

Yet another delegate is running pilots to investigate different technologies as a result of setting up seven workstreams to effectively brainstorm better ways of delivering on their green commitments and improving homes for tenants.

Good data and new skills

Changes like these need everyone in the organisation to be climate literate and to be equipped with the right data.

For example, organisations can only make informed investment (and, indeed, divestment) decisions about the best way to decarbonise if they understand their starting carbon baseline. One delegate described how their housing association does this. Each property in their portfolio is issued with a passport containing data relevant to its the journey to net zero. Analysing this data in aggregate reveals ‘archetypes’ that allow smarter decisions. It could also lay the foundations for the kinds of regional strategies describe above.

For this data collection to be worthwhile, though, the direction of travel needs to be assured and, just as importantly, agreed across the industry. The starting point – agreed definitions – is underway thanks to the industry’s work on the UK Net Zero Carbon Building Standard.

The group felt that, to speed up learning and uptake of lessons learnt, their sector should be finding new ways to disseminate and share information. Indeed, it is fundamental if the vision of group procurement for optimum efficiency and economies of scale are to be realised.

Getting the right partners

Building contractors could help social housing clients in their net zero journeys in a variety of ways. Overshadowing everything else, clients wanted an active partner working to a common goal for the public good, with the tenants/residents/end-users as their primary focus. Beyond that, clients were after collaborative skills and technical knowledge with contractors having the integrity to hold their hands up when they don’t have the answer.

The dearth of labour and relevant skills in the construction industry is delaying progress to net zero, which hurts clients and, of course, the people who live in their homes. Clients need contractors to invest in training, upskilling and apprenticeships to increase numbers and ease the transition. Equally, they need contractors to maintain and expand their organisational capability by keeping teams together and by sharing their net zero knowledge with clients (and others) across the sector.

Being better clients

The roundtable delegates were quick to concede that good partnership is a two-way street, and that they could make life easier for contractors.

In particular, one delegate thought that they didn’t give contractors enough time at procurement and during the early stages of a project to get the brief right, align expectations, and ensure shared understanding of their carbon-reduction objectives. Similarly, another thought that they did not foster enough of a learning culture. As the delegate put it, “To be better clients, we need to have better data to know what good looks like, to have clear service levels in place, clear reporting mechanisms, and clear handovers.”

The future

The Chair took advantage of the timing of the roundtable – slap bang in the middle of the UK’s 2024 general election campaign – to gauge the group’s hopes and aspirations for the new government.

The message that came back was unanimous: relief from policy uncertainty, adequate long-term funding, a national retrofit strategy, and reform of town planning. Time will tell if any of that is forthcoming.